Fortune Says: Google: The Search Party Is Over

Administrator from GB

It looks a lot like the midday break at some elite college campus. But almost 12 years after it was launched by precocious Stanford grad students Larry Page and Sergey Brin, Google and its founders are grappling with a very grownup set of problems. Google's core business, online search, is slowing. That is partly due to Google's own success; it's hard to keep posting record growth rates when you dominate a business so thoroughly -- Google sites lead the U.S. market with 64% of all searches conducted. But more crucially, the web has changed significantly since Google became a verb. There is (at long last) fresh competition from Microsoft's Bing, and also a new wave of sites and services that offer alternatives for consumers' time and attention -- and the advertisers that follow them.

Full Member

joined:July 13, 2006
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I use facebook everyday, for personal use and for business. Same to a lesser degree with twitter. It hasn't slowed my use of google one bit. Social media just doesn't replace search. And mobile search, since its mostly mobile google, just reinforces the notion that the web is synonymous with google. The writer just doesn't get it when it comes to Android. Android isn't about revenue; it's about branding consciousness.

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joined:Apr 21, 2002
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Yes Karter, you are essentially correct, although the nominal value is arbitrary and dependent on factors such as interest rates. Although I would not agree with MSN. MSFT is pretty much at it's nominal value I would say. But I am sure cloud operating systems will be what hurts their cash cow. Which could be where Google (Android) will thrive.

karter

11:01 pm on July 30, 2010 (gmt 0)

Inactive MemberAccount Expired

i wonder, would people , businesses actually surrender their business data to another business , one that has a reputation for venturing into , other businesses

Information is literally at the heart of any business, those chaps who we get on well today, well tomorrow, who knows

Full Member

In Google-world, everything looks Googly. Time is also googlized: the future will be Google. The past has always been Google.

It's hard for many people to realize, but there was a time before Google. Actually, there was a time before search engines. The web wasn't always all about search.

From 1995-2001, the model of the web was portals. The big sites were portals: Yahoo, AOL, Go.com, Excite, @Home. Nobody cared about search. In 2001, Google's founders tried to sell their search engine for a mere one million dollars; nobody wanted it. They didn't see a use for it.

Around 2002-2003, the model of the web changed. Portals became irrelevant. Search engines became the main issue. It also took a few years for Google to become #1.

And now, again, in 2009-2010, the web is changing again. Search is no longer the focus. It's now social connections. Google isn't going to disappear, but it will become "just another site", in the same way Yahoo has become just another site. Yahoo has 500m users, billions in revenues... and who cares? The same is happening to Google. All the attention, development, and investments is in social, namely, Facebook.

Google can't change that, no more than the portals could force the attention to stay on portals.

Social won't be the final stage. Facebook will have its day in the sun. And in 5-7 years, the next phase will come along.

(And yes, there was a phase before portals. From the mid-80s to 1994, the web was centered around Usenet.)

Preferred Member

joined:Nov 15, 2007
posts:620
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Excellent take Eurydice. Agree with it all except to add there will be a social media crash within 18-24 months equiv to dot.com boom. I'm not sure what players will be left standing, and where Google will end up.

It's all about adaptability and agility. Apple is a good example that moved from a computer company to a media company. They evolved, and that's why they survived.

One thing. The whole issue of growth slowing is, crazy as it seems, is one of the critical factors that ends up being sued to value the stock. It's nuts. If you are winning things handsdown but you don't grow fast enough your stock price drops.

Junior Member

Around 2002-2003, the model of the web changed. Portals became irrelevant. Search engines became the main issue. It also took a few years for Google to become #1.

And now, again, in 2009-2010, the web is changing again. Search is no longer the focus. It's now social connections.

Portals and Search are solutions to exactly the same problem: How do I find stuff on the Internet. Search was the item in 2001, but it wasn't good enough, which is why human-reviewed directories were sprouting all over the place and people found it easier to use portals than to search and then wade in pages and pages of fully irrelevant results. Comes Google and suddenly search becomes a better way to find stuff. Combined to the fact that directories could never scale to keep up with the growth of the Internet, search replaced directories.

Social connections on the other end, ARE NOT solving that same problem. The problem of finding stuff on the Internet is pretty much solved. You search for it, and most of the time, you will find it.

Social may be all the buzz these days, but it is a solution to a different problem linked to the growth of the internet. 5-6 years ago, the internet was all about businesses and content providers. You had something to sell, something to promote, or whatever, and you put it on the web for people to see. Online Social interactions were going on already, but outside the web (ICQ piked at 100M users), and mostly available to the somewhat technically inclined. Techies have been able to do pretty much everything that's available on Facebook today for the last 10 years.

Now that members of the general public spend a significant part of their time online and build very real relationships with people they have never met in person comes the need for simple social media where people can maintain their own networks of friends, create a personal presence, share pictures and stuff...

Anyway, the bottom line is that social media is a solution to a different problem, and it will not replace search, because it can't, the same way that search can't replace social media. You can ask questions on social network, but if you really started asking as many questions as you ask Google, you will quickly be told that GIYF. Plus asking a question on Facebook is never going to be as fast as typing the same question in Google. The questions you can efficiently ask on social media are quite different from the question you can efficiently ask on Google. Google will tell you the speed of light, Facebook will tell you if Jenny is still dating that *** who got drunk at the party last month. Google can't tell you much about Jenny's current status, and Facebook can't tell you the speed of light... unless one of your friends looks for it on Google, and then tells you.

Google growth "problem" with search is that search is mostly a solved problem, and that pretty much everyone has agreed search is the way to find data on the Internet, and it works reasonably well. They solved that problem pretty well and became a multi-billion dollars business in the process. Now, they need to find and solve another major problem to get back to the same growth model.

Administrator from US

Now, they need to find and solve another major problem to get back to the same growth model.

Search made no money.

Advertising made money.

Google virtually owns the online advertising market.

Where would you suggest they find another growth model in advertising?

They're actually trying with Android and mobile advertising to make sure they don't lose a major piece of the pie but I don't foresee mobile advertising as big a growth model, not in the short term anyway.

I think it'll be more like Microsoft's path from here on, where a couple of raging successes are used as a foundation to build a bunch of smaller successes which when accumulated all add up to additional billions.

Preferred Member

joined:May 23, 2003
posts: 586
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Google is not going anywhere for a long time! I think that Apple will be taking some of their market share via iphone searches and gain more money from iphone app advertising which could spell big trouble.. but I think us computer geeks are not going to drop our computers anytime soon to use an iphone 100% of the time.

Social won't be the final stage. Facebook will have its day in the sun. And in 5-7 years, the next phase will come along.

And yes, there was a phase before portals. From the mid-80s to 1994, the web was centered around Usenet.

Yeah I hardly think Facebook can count as a portal but maybe it is headed in that direction. I still use Yahoo homepage for my portal its clean and not any spam that you would get on facebook. Facebook needs to be more of something you do when you have free time not at work...that is unless you are marketing with facebook which turns out to be pretty easy to do just time consuming.

Junior Member

joined:July 4, 2004
posts:103
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Search made no money.

Advertising made money.

Google virtually owns the online advertising market.

Semantics. Advertising brings money only to the degree that they are able to deliver targeted audiences. That audience was (and is still) mostly acquired thanks to search (still 2/3 of the revenue, even today). Without their success on the search arena, nothing else would have been possible, including the content network

Webmasters accepted to deal with Google because Google had such a huge rep in the search market. Without search, Google would have been unable to create the content network.

So, yeah, advertising is how they turned their audience into money, but Search is the only reason they had an audience in the first place.

Where would you suggest they find another growth model in advertising?

As you say, they have cornered the online advertising business, so IMHO, they don't have a high growth potential in that arena. Advertisers only spend so much, and when you get 85% of the pie already, the growth you can expect is the market's growth combined with squeezing down the costs (commissions paid out to webmasters)

In the last few years, my feeling is that they have increased their margins to the breaking point and that a number of webmasters are jumping ship.

Concurrently, users increasingly develop ad blindness. They simply parse the page and ignore the ads. This trend will probably continue, not to mention ad blockers. Even though they reach more and more people, these people may be becoming less likely to click the ads.

All in all, I don't think that Google can legitimately expect a lot of growth in advertising revenues. Some, yes, but nothing like what they have had over the last few years.

On the other end, just because most of their money so far as been made through advertising doesn't mean they couldn't make some cash through other avenues, just like every other company on the market. Microsoft earns more than twice as much as Google, and advertising is certainly not a major item on their balance sheet, so there is no reason why Google would be limited to ad revenue.

Google needs to find another big problem to solve and solve it. I am not sure what. If I knew that, I might just be a tad bit richer than I currently am.

I have some ideas, but I lack data points to validate them.

Google Apps could be a good source of revenue if they offered a real advantage over Ms Office and OOo.

If they made a deal with content creators, YouTube could implement a subscription model. Not big money, but the effort would be relatively minimal.

On the same line, turn youtube into a music/video store following the iTunes model. Extend Chrome and Android to allow them access to the store and play the content. Allow users to sell their video content through youtube and pocket a commission.

The iTunes store sold $1.8bn worth of music in 2009. It's not a small market, and Google could get a share of that pie.

Anyway, those are just some ideas thrown together in a few minutes. Nothing really revolutionary there, but the point is that with their quasi monopoly on search and online advertising, the growth potential might not be that great, but nothing is stopping them from generating revenue for other sources aside of ads.

Senior Member

joined:Jan 30, 2006
posts:1669
votes: 10

^ they stop spending sleepless nights trying to get "PAGE RANK" or figure out why their quality score is down and stop spending money with adwords when all they get is a bill and a headache with no support. Don't complain or goog will slap you around and ban you.

Full Member

joined:Jan 26, 2005
posts: 280
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Slyver writes:

Portals and Search are solutions to exactly the same problem: How do I find stuff on the Internet.

There's a difference between portals and search. Yahoo was just a list of links and then it was taken over by Hollywood. They applied the TV network model (NBC, CBS, etc.) to make Yahoo into a destination with content to attract viewers and then offer the viewers to advertisers. That's a portal.

But the content was too large in amount and diversity. One portal (or even six portals) couldn't offer it all, plus many kinds of content didn't want to be inside portals (corporate sites, adult sites, etc.)

It sounds odd, but few people used search engines in 1995-2001. There were a handful of search engines, incl. Google, in 1998. These didn't work well, they were easy to spoof, etc., but worst, there was no money in it. It took Google four years to began making money (via advertising.)

Search offered a new solution over portals: how to find more stuff, i.e., stuff that wasn't in a portal.

In a way, Facebook has the same features (and problems) of portals. Facebook offers content (everyone's pages, plus games, etc.) to attract visitors and makes money by offering that audience to advertisers.

One of FB's problem is the same as portals: corps aren't going to give up their sites and turn into FB pages. Macys, United Airlines, Citibank, etc. are primarily brands. They maintain their brand identity by controlling their design, logo, colors, fonts, layout, etc. FB demands that everyone use FB's identity package (which reinforces FB's branding and reduces the other corps' branding).

Thus as the social market expands, companies will insist more and more on staying outside of FB's walled garden. The bigger FB becomes, the stronger the pressure against it. The current FB model won't last (and indeed, FB is already talking about an entirely new model).

How long will FB Planet exist? Two days ago, FB said it would IPO perhaps in 2012. Hmmm... the VCs would IPO ASAP to recover their money plus multiples. But if they're not IPOing now, then there's problems.

Investors have put $875 million into FB. FB must IPO for at least $4-6b so investors can get a 4X ROI. However, the idiots want $30B (a 30X multiple). The longer they wait, the more opportunity for someone else to do something (Google is lurking in the bushes) or the web shifts into yet another model. (Remember Webvan? It lost $1 billion in VC money.)

Mark Zuckerberg had better not close his eyes when he sleeps. FB's VCs and investors are desperate for money (VCs made a 2% return in the entire 2000-2010 period) (my cat did better: she catches a mouse every other day). FB's VCs would sell Mark to Al Qaida if they could make money on the snuff video.

Junior Member

joined:July 4, 2004
posts:103
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To what other ship?

To any ship that looks even remotely able to float. If you look around the forums, you will see quite a few people trying to get on board of Microsoft PubCenter, and the bloody thing isn't even actually available. Some people are even willing to swim on their own and try to find their own advertisers, just like before Google came around.

To me, this speaks volumes about the satisfaction level of adsense users. 7 years ago, people would have laughed at the very idea that someone might not want some of Google's free money, they were too busy bragging about the checks they got. Today, the best defense offered for the system is yours: there is no viable competitor.

I may be completely wrong about it, I don't have actual stats to back up my feeling, but I feel this way nonetheless. My bet is that the day of fast growing AD revenue are over for Google. They already have most of that market and their efforts to get the last few market shares will be barely sufficient to keep them to their current level.

Administrator from US

joined:Jan 25, 2005
posts:14650
votes: 94

Some people are even willing to swim on their own and try to find their own advertisers, just like before Google came around.

Actually, some of us never stopped getting advertisers on our own and we were selling that ad space long before AdSense or Google. All AdSense ever did was give every webmaster on the planet the false sense of entitlement that every web site, regardless of merit, should make money. That's Google's legacy and we've had to put up with the whining about one cent clicks and earning $10/mo ever since.

Senior Member

joined:Jan 30, 2006
posts:1669
votes: 10

why disallow organic traffic goog can send you? Foolishness, I do not do anything for google but I don't do anything to block them. They refer about 10% of my traffic and its all organic, I don't pay 1 single cent to them nor do I use their webmaster tools.

Administrator from US

joined:Jan 25, 2005
posts:14650
votes: 94

why disallow organic traffic goog can send you?

Why?

Everyone likes to claim Google is old news, everyone's jumping ship, etc. so I was just suggesting those that don't like Google cut off their relationship because taking free organic traffic from a company someone dislikes is being hypocritical.

I don't do business with companies I don't like, I don't give them money and I certainly wouldn't want their charity.

Luckily I don't dislike Google :)

However, many will sit and cry Google is evil, bad, etc. and bad mouth them all day long yet still accept any scraps and crumbs Google will toss their way.

It's kind of like people that don't work and live on welfare (AdSense is webmaster welfare) complaining about the government.

Senior Member

However, many will sit and cry Google is evil, bad, etc. and bad mouth them all day long yet still accept any scraps and crumbs Google will toss their way.

It's kind of like people that don't work and live on welfare (AdSense is webmaster welfare) complaining about the government.

no offence incredibill, but this is nonsense. anyone who chucks away free traffic is just plain dumb. it is like cutting your nose off to spite your face. people are allowed to be critical of some areas of google's business and still be grateful for the free traffic that they send.

and saying that people on benefits shouldn't criticise the government just means that you have fallen for the socialist's favourite trick. half the reason they put up benefits and pensions is so people feel duty bound to vote them in again, in case the other party takes it away.

Administrator from US

Everyone claims Google has too much power, no respect for people's privacy, complain complain complain, yet the answer to removing that power is as simple as the 2 line solution I provided above.

Even the very large publications that complain Google profits off their backs and does nothing but write slash pieces like Fortune did, doesn't have the intestinal fortitude to pull the robots.txt plug.

Give that power to Yahoo and Bing, then you'll have a new demon to deal with :)

half the reason they put up benefits and pensions is so people feel duty bound to vote them in again, in case the other party takes it away.

Well considering that was my sideways point about AdSense being webmaster welfare, yet the webmasters don't feel duty bound or loyal to AdSense/Google whatsoever even after making all that free money.

Sing their praises until it turns sour and then run them out on a rail.

Junior Member

joined:July 4, 2004
posts:103
votes: 0

Everyone likes to claim Google is old news, everyone's jumping ship, etc. so I was just suggesting those that don't like Google cut off their relationship because taking free organic traffic from a company someone dislikes is being hypocritical.

Who is everyone?

You distort completely what was said just to have an opportunity to take "rightful" offense at it. What's the point?

Anyway, while we are on the topic, Google exists only because of our collective content. 99.999...%* of people don't visit Google to see Google's content. They go to Google to find our content. So when Google sends us traffic, it is not a charity they are doing us. It's just their job, and doing that job is the only reason why they have any traffic to send in the first place.

It's a symbiotic relationship. Users couldn't find our content without Google, and without our content, Google search would have nothing to offer.

Adsense money is not the *** dole, it's a payment for services delivered.

And for the record, I tend to like Google, I just don't think they have much growth left in the ad business. _____________________ *Yeah, I know that 87.63% of all statistics are made up, obviously.

Junior Member

Everyone claims Google has too much power, no respect for people's privacy, complain complain complain, yet the answer to removing that power is as simple as the 2 line solution I provided above.

Those two lines just cut you out. The effect on Google is too tiny to measure.

On the one end, you have millions of people searching for content, on the other, millions of content providers trying to make their content known. In the middle, Google. One player controlling exactly who sees what.

Cutting one person on either side makes no difference, except to the said person.

You want your content seen, you have to deal with Google, because that's where yourprospective customers go when they are looking for yourdata. There is no getting around that fact currently.

You can't "fix" the issue by banning Google's spiders. With very rare exceptions, you either deal with Google or resign yourself to a website that will never be anything more than an expensive business card.